Jade Rahmani : Is that going to be an ongoing adjustment?
Karen Brennan : Yes, it will be. And one other point. It was previously immaterial because of interest rates, but now that interest rates are increasing, right, that’s starting to be a more meaningful number.
Jade Rahmani : So this is going to be a deduction going forward from GAAP earnings to adjusted earnings? Or will it become a positive contribution?
Karen Brennan : It depends on the timing of the amount of new contracts put in place and in any particular quarter and how much interest is accruing on those relative to how much is burned off in the quarter. So because our — and particularly in a period like this, where you have transaction volumes that are fluctuating pretty greatly from quarter-to-quarter, the outcome could be different. In the coming years, we expect it will be a deduction from GAAP.
Jade Rahmani : Okay. I’ll probably have to follow up with you later on that. And then the restructuring charges had also a big uptick quarter-over-quarter. I think usually in the fourth quarter, there is an uptick, but definitely outside the range of the last few quarters. Any color you can provide on that and what we would expect for 2023?
Karen Brennan : Yes. So the uptick in this quarter was really related to — or the last quarter is related to the restructuring activities that I mentioned as it relates to our headcount reduction due to the changes in our operating model and role is becoming redundant, different management layers being removed. As we mentioned at November investor briefing and we’re going to reference today, we’re continuing to drive forward in terms of operating efficiencies in our business that we can have better operating leverage as our platform scales in the future. Some of that will require investment, some of that will involve restructuring activities. And so I would expect some additional restructuring costs to come through in 2023.
Operator: The final question comes from the line of Patrick McIlwee with William Blair.
Patrick McIlwee: I understand that the overarching trends are not ideal. But given some of your peers reported leasing trends that were a bit more stable, can you provide any more color on what drove the deceleration in that business? And kind of as a two part to that, given leasing is generally expected to follow trends in capital markets, if you’d expect things to get worse before they get better heading into 2023?
Karen Brennan : Yes. Great question. So first, on the leasing declines. Our business mix really tends to skew to the higher high-quality, larger transactions. And in the U.S., anyway, as we looked at from an overall market perspective, the slowdown in office leasing was primarily driven by the large 100,000 square foot plus occupier segment, which is where, right, major corporate requirements are falling. And the overall market leasing levels for that segment, right, that’s 100,000 square foot plus, was the lowest recorded since early 2021. So since — right after the recovery started. And it was more than 50% below the pre-pandemic quarterly average for that size segment. So that really was for us, a pretty significant impact to our overall revenues.
And sorry, remind me your second out was the timing of declines relative to different segments. So the investment sales decline did begin before the leasing declines. And that’s typically the way right? You’ll have leasing declines then or have investment sales decline, then leasing, then project management because of the relationship, the project management to leasing. We did have more pronounced declines compared to the prior year beginning in November for leasing as compared to September for investment sales. So that gives you an idea of the kind of time gap between when we really started seeing more significant falloff in activity between those two transaction lines.
